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Item 1. Financial Statements

2024-04-29 compared with 2023-10-27 · 267 added, 406 removed, 591 unchanged (53% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

FOR THE THIRD QUARTER AND NINE MONTHS ENDED OCTOBER 1, 2023 AND OCTOBER 3, 2022

FOR THE FIRST QUARTER ENDED MARCH 31, 2024 AND APRIL 2, 2023

(Unaudited - Amounts in millions, except per-share amounts)

Third Quarter Nine Months

2023 2022 2023 2022

First Quarter

Net sales $ 1,350.1 $ 1,383.3

5 unchanged sentences

Operating income (loss)

264.3 245.2 762.9 698.2

Interest and debt income (expense), net ( 12.7 ) ( 21.0 )

Gain (loss) on debt extinguishment — — 1.6 10.6

Non-service retirement benefit income (expense), net 2.7 3.3

1 unchanged sentence

Income (loss) before income taxes

246.1 231.3 704.7 655.8

Provision (benefit) for income taxes 46.4 44.9

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE THIRD QUARTER AND NINE MONTHS ENDED OCTOBER 1, 2023 AND OCTOBER 3, 2022

FOR THE FIRST QUARTER ENDED MARCH 31, 2024 AND APRIL 2, 2023

(Unaudited - Amounts in millions)

Third Quarter Nine Months

2023 2022 2023 2022

First Quarter

Net income (loss) including noncontrolling interest $ 179.1 $ 178.8

11 unchanged sentences

(Unaudited - Amounts in millions, except share amounts)

October 1, 2023 January 1, 2023

March 31, 2024 December 31, 2023

Current Assets

5 unchanged sentences

Total current assets 3,223.6 2,981.4

Property, plant and equipment, net of accumulated depreciation and amortization of $ 932.1 at October 1, 2023 and $ 847.8 at January 1, 2023

Property, plant and equipment, net of accumulated depreciation and amortization of $ 961.3 at March 31, 2024 and $ 947.1 at December 31, 2023

Goodwill 7,956.0 8,002.8

21 unchanged sentences

issued shares:

47,194,766 at October 1, 2023 and 47,194,766 at January 1, 2023;

47,420,690 at March 31, 2024 and 47,331,845 at December 31, 2023;

outstanding shares:

47,183,514 at October 1, 2023 and 46,912,635 at January 1, 2023

47,420,690 at March 31, 2024 and 47,331,845 at December 31, 2023

Additional paid-in capital 4,426.5 4,407.3

Retained earnings 5,626.0 5,447.5

Treasury stock, 11,252 shares at October 1, 2023 and 282,131 shares at January 1, 2023

( 0.8 ) ( 20.0 )

Treasury stock - none

Accumulated other comprehensive income (loss) ( 725.0 ) ( 634.1 )

6 unchanged sentences

Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total

Balance, January 1, 2023 $ 0.5 $ 4,353.4 $ ( 20.0 ) $ 4,561.8 $ ( 726.5 ) $ 8,169.2

Net income (loss) — — — 178.7 — 178.7

Other comprehensive income (loss), net of tax — — — — ( 0.3 ) ( 0.3 )

Treasury stock issued — ( 10.6 ) 10.6 — — —

Stock-based compensation — 7.9 — — — 7.9

Exercise of stock options — 10.2 — — — 10.2

Balance, April 2, 2023 0.5 4,360.9 ( 9.4 ) 4,740.5 ( 726.8 ) 8,365.7

Net income (loss) — — — 185.3 — 185.3

Other comprehensive income (loss), net of tax — — — — 14.8 14.8

Treasury stock issued — ( 2.9 ) 2.9 — — —

Stock-based compensation — 8.4 — — — 8.4

Exercise of stock options — 4.8 — — — 4.8

Balance, July 3, 2023 $ 0.5 $ 4,371.2 $ ( 6.5 ) $ 4,925.8 $ ( 712.0 ) $ 8,579.0

Balance, December 31, 2023 $ 0.5 $ 4,407.3 $ — $ 5,447.5 $ ( 634.1 ) $ 9,221.2

Net income (loss) — — — 178.5 — 178.5

Other comprehensive income (loss), net of tax — — — — ( 90.9 ) ( 90.9 )

Treasury stock issued — ( 5.7 ) 5.7 — — —

Stock-based compensation — 12.0 — — — 12.0

Exercise of stock options — 12.2 — — — 12.2

Balance, October 1, 2023 $ 0.5 $ 4,385.7 $ ( 0.8 ) $ 5,124.4 $ ( 787.9 ) $ 8,721.9

Exercise of stock options and other — 7.2 — — — 7.2

Balance, March 31, 2024 $ 0.5 $ 4,426.5 $ — $ 5,626.0 $ ( 725.0 ) $ 9,328.0

Common Stock Additional Paid-in Capital Treasury Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total

4 unchanged sentences

Stock-based compensation — 7.9 — — — 7.9

Exercise of stock options — 12.7 — — — 12.7

Exercise of stock options and other — 10.2 — — — 10.2

Balance, April 2, 2023 $ 0.5 $ 4,360.9 $ ( 9.4 ) $ 4,740.5 $ ( 726.8 ) $ 8,365.7

Net income (loss) — — — 171.3 — 171.3

Other comprehensive income (loss), net of tax — — — — ( 153.1 ) ( 153.1 )

Treasury stock issued — ( 2.9 ) 2.9 — — —

Stock based compensation — 6.5 — — — 6.5

Exercise of stock options — 4.8 — — — 4.8

Balance, July 3, 2022 $ 0.5 $ 4,333.6 $ ( 24.3 ) $ 4,157.1 $ ( 605.0 ) $ 7,861.9

Net income (loss) — — — 178.3 — 178.3

Other comprehensive income (loss), net of tax — — — — ( 359.2 ) ( 359.2 )

Treasury stock issued — ( 0.5 ) 0.5 — — —

Stock-based compensation — 6.6 — — — 6.6

Exercise of stock options — 0.9 — — — 0.9

Balance, October 2, 2022 $ 0.5 $ 4,340.6 $ ( 23.8 ) $ 4,335.4 $ ( 964.2 ) $ 7,688.5

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED OCTOBER 1, 2023 AND OCTOBER 3, 2022

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND APRIL 2, 2023

(Unaudited - Amounts in millions)

4 unchanged sentences

Stock-based compensation 12.0 7.9

Debt extinguishment (income) expense ( 1.6 ) ( 10.6 )

Changes in operating assets and liabilities excluding the effect of business acquired:

10 unchanged sentences

Purchase of businesses, net of cash acquired — ( 52.5 )

Proceeds from disposal of fixed assets — 5.2

Other investing, net 0.9 1.3

Net cash provided by (used in) investing activities ( 15.9 ) ( 76.9 )

Financing Activities

Proceeds from (payments on) fixed rate senior notes ( 308.4 ) —

Net borrowings from (repayments made to) credit facility — ( 100.0 )

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

October 1, 2023

March 31, 2024

Basis of Presentation

1 unchanged sentence

Certain information and disclosures normally included in notes to consolidated financial statements have been condensed or omitted pursuant to such rules and regulations, but resultant disclosures are in accordance with generally accepted accounting principles in the United States (“GAAP”) as they apply to interim reporting.

The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes in Teledyne’s Annual Report on Form 10-K for the fiscal year ended January 1, 2023 (“2022 Form 10-K”).

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne’s consolidated financial position as of October 1, 2023 and the consolidated results of operations, consolidated comprehensive income (loss) and consolidated cash flows for the third quarter and nine months ended October 1, 2023.

The results of operations and cash flows for the periods ended October 1, 2023 and cash flows for the nine months ended October 1, 2023 are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year.

Certain prior year amounts have been reclassified to conform to the current period presentation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly, in all material respects, Teledyne’s consolidated financial position as of March 31, 2024 and the consolidated results of operations, consolidated comprehensive income (loss) and consolidated cash flows for the first quarter ended March 31, 2024.

The results of operations and cash flows for the periods ended March 31, 2024 and cash flows for the three months ended March 31, 2024 are not necessarily indicative of the results of operations or cash flows to be expected for any subsequent quarter or the full fiscal year.

Recent Accounting Standards

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities-Supplier Finance Programs (Topic 405-50):

Disclosure of Supplier Finance Program Obligations.

This standard requires annual disclosure of the key terms of supplier finance programs, obligations outstanding with a description of where the amounts are presented in the financial statements, a rollforward of such amounts, and interim disclosure of amounts outstanding as of the end of each period.

The adoption of ASU 2022-04 did not have an impact on the Company's disclosures as the impact of supplier finance programs is not material to the Company's financial statements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This standard requires a public entity to disclose significant segment expenses and other segment items on an interim and annual basis.

Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”).

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements.

The Company is evaluating the impact of adopting this guidance on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction focuses on the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating the impact of adopting this guidance on its consolidated financial statements.

Business Acquisitions

2024 Acquisitions

Refer to Note 15 for discussion of announced acquisitions or acquisitions completed after the end of the first quarter of 2024.

2023 Acquisitions

Xena Networks

During the fourth quarter of 2023, the Company acquired Xena Networks ApS and affiliates (“Xena Networks”) for $ 24.2 million in cash, net of cash acquired, and subject to certain adjustments.

Xena Networks, headquartered in Denmark, is a leading provider of high-speed terabit ethernet validation, quality assurance, and production test solutions.

Xena Networks is part of the test and measurement instrumentation product line within the Instrumentation segment.

Goodwill resulting from the Xena Networks acquisition will not be deductible for tax purposes.

During the first quarter of 2023, the Company acquired ChartWorld International Limited and affiliates ("ChartWorld") for $ 53.5 million in cash, net of cash acquired, and subject to certain adjustments.

2 unchanged sentences

Goodwill resulting from the ChartWorld acquisition will not be deductible for tax purposes.

2022 Acquisitions

During the fourth quarter of 2022, Teledyne acquired ETM-Electromatic, Inc.

("ETM") for $ 87.7 million in cash, net of cash acquired, and subject to certain adjustments.

ETM, headquartered in Newark, California, designs and manufactures high-power microwave and high-energy X-ray subsystems for cancer radiotherapy, defense and X-ray security applications.

ETM is part of the Digital Imaging segment.

Goodwill resulting from the ETM acquisition will not be deductible for tax purposes.

During the third quarter of 2022, the Company acquired an approximate 80 % majority interest in Noiseless Acoustics Oy ("NL Acoustics"), paying $ 11.9 million in cash, net of cash acquired, during the year.

NL Acoustics, located in Helsinki, Finland, designs and manufactures acoustics imaging instruments and predictive maintenance solutions.

NL Acoustics is part of the Digital Imaging segment.

Goodwill resulting from the NL Acoustics acquisition will not be deductible for tax purposes.

For further information about the Company's redeemable noncontrolling interest, refer to the Company's 2022 Form 10-K.

The following tables show the purchase price (net of cash acquired), goodwill acquired, and acquired intangible assets for these acquisitions (in millions):

Acquisitions Acquisition Date Cash Paid (a) Goodwill Acquired Acquired Intangible Assets

Xena Networks October 13, 2023 $ 24.2 $ 21.1 $ 4.8

ChartWorld January 3, 2023 53.5 55.5 11.3

(a) Net of cash acquired

Acquisitions Acquisition Date Cash Paid (a) Goodwill Acquired Acquired Intangible Assets

ETM October 28, 2022 $ 87.7 $ 33.5 $ 20.9

NL Acoustics (acquisition of 80 % interest)

July 15, 2022 11.9 11.7 3.8

Total $ 77.7 $ 76.6 $ 16.1

2 unchanged sentences

The differences between the fair value of the consideration paid and the estimated fair value of the assets and liabilities acquired was recorded as goodwill.

The fair value of the acquired identifiable assets and liabilities for the ChartWorld and ETM acquisitions is provisional pending finalization of the Company’s acquisition accounting, including the measurement of tax basis in certain jurisdictions and the resulting deferred taxes that might arise from book and tax basis differences, if any.

The fair value of the acquired identifiable assets and liabilities for the Xena Networks acquisition is provisional pending finalization of the Company’s acquisition accounting, including the measurement of tax basis in certain jurisdictions and the resulting deferred taxes that might arise from book and tax basis differences, if any.

Pro forma results of operations, the revenue and net income subsequent to the acquisition date, and a more detailed breakout of the major classes of assets and liabilities acquired for these acquisitions have not been presented because the effects of these acquisitions, individually and in the aggregate, were not material to the Company's financial results.

The significant factors that resulted in recognition of goodwill for the 2022 and 2023 acquisitions included the acquired businesses’ market positions, growth opportunities in the markets in which they operate, their experienced work force and established operating infrastructures.

The significant factors that resulted in recognition of goodwill for the 2023 acquisitions included the acquired businesses’ market positions, growth opportunities in the markets in which they operate, their experienced work force and established operating infrastructures.

The results of these acquisitions have been included in Teledyne’s results since the dates of their respective acquisition.

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The following table presents net sales and operating income by segment (dollars in millions):

Third Quarter % Nine Months %

2023 2022 Change 2023 2022 Change

First Quarter %

2024 2023 Change

Net sales (a):

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Operating income $ 234.3 $ 242.5 ( 3.4 ) %

(a) Net sales exclude inter-segment sales of $ 7.2 million and $ 21.5 million for the third quarter and first nine months of 2023, respectively, and $ 4.8 million and $ 15.4 million for the third quarter and first nine months of 2022, respectively.

(a) Net sales exclude inter-segment sales of $ 4.8 million and $ 6.2 million for the first quarter of 2024 and 2023, respectively.

Identifiable assets are those assets used in the operations of the segments.

1 unchanged sentence

Identifiable assets:

October 1, 2023 January 1, 2023

March 31, 2024 December 31, 2023

Digital Imaging $ 11,197.1 $ 11,382.2

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The following table provides a summary of the net sales by product line for the Instrumentation segment (in millions):

Third Quarter Nine Months

First Quarter

Instrumentation 2024 2023

6 unchanged sentences

The Company disaggregates its revenue from contracts with customers by customer type and geographic region for each segment, as management believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

Third Quarter Ended

October 1, 2023

Third Quarter Ended

October 1, 2023

Customer Type Geographic Region (c)

(in millions) U.S.

(a) Other (b) Total United States Europe Asia All other Total

Digital Imaging $ 151.5 $ 624.3 $ 775.8 $ 358.6 $ 196.6 $ 150.0 $ 70.6 $ 775.8

Instrumentation 27.0 302.1 329.1 142.5 93.7 64.1 28.8 329.1

Aerospace and Defense Electronics 69.8 113.5 183.3 123.7 35.1 17.0 7.5 183.3

Engineered Systems 102.5 11.8 114.3 112.6 — 0.8 0.9 114.3

Total $ 350.8 $ 1,051.7 $ 1,402.5 $ 737.4 $ 325.4 $ 231.9 $ 107.8 $ 1,402.5

Government sales include sales as a prime contractor or subcontractor.

(b) Primarily commercial sales

Nine Months Ended

October 1, 2023

Nine Months Ended

October 1, 2023

First Quarter Ended

March 31, 2024

First Quarter Ended

March 31, 2024

Customer Type Geographic Region (c)

9 unchanged sentences

Third Quarter Ended

October 2, 2022

Third Quarter Ended

October 2, 2022

Customer Type Geographic Region (c)

(in millions) U.S.

(a) Other (b) Total United States Europe Asia All other Total

Digital Imaging $ 156.3 $ 621.6 $ 777.9 $ 367.6 $ 182.8 $ 158.8 $ 68.7 $ 777.9

Instrumentation 29.5 276.9 306.4 149.4 63.6 64.4 29.0 306.4

Aerospace and Defense Electronics 62.8 106.7 169.5 136.5 10.3 16.6 6.1 169.5

Engineered Systems 99.1 10.7 109.8 109.4 — 0.3 0.1 109.8

Total $ 347.7 $ 1,015.9 $ 1,363.6 $ 762.9 $ 256.7 $ 240.1 $ 103.9 $ 1,363.6

Government sale include sales as a prime contractor or subcontractor.

(b) Primarily commercial sales

Nine Months Ended

October 2, 2022

Nine Months Ended

October 2, 2022

First Quarter Ended

April 2, 2023

First Quarter Ended

April 2, 2023

Customer Type Geographic Region (c)

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Net sales in the Engineered Systems segment are typically between 45 % and 55 % fixed price contracts in a given reporting period, with the balance of net sales derived from cost-reimbursable type contracts.

For the nine months ended October 1, 2023, approximately 49 % of net sales in the Engineered Systems segment were derived from fixed price contracts.

For the three months ended March 31, 2024, approximately 47 % of net sales in the Engineered Systems segment were derived from fixed price contracts.

Contract Liabilities

Contract Liabilities by Balance Sheet Location (in millions) October 1, 2023

January 1, 2023

Contract Liabilities by Balance Sheet Location (in millions) March 31, 2024

December 31, 2023

Accrued liabilities $ 274.2 $ 241.1

1 unchanged sentence

Total contract liabilities $ 300.1 $ 266.6

The Company recognized revenue of $ 118.9 million during the nine months ended October 1, 2023 from contract liabilities that existed at the beginning of year.

The Company recognized revenue of $ 66.3 million during the three months ended March 31, 2024 from contract liabilities that existed at the beginning of year.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders for which work has not been performed as of the period end date and exclude unexercised contract options and potential orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity).

As of October 1, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 3,122.5 million.

As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 3,290.2 million.

The Company expects approximately 78 % of remaining performance obligations to be recognized into revenue within the next twelve months , with the remaining 22 % recognized thereafter.

4 unchanged sentences

Since certain contracts extend over a long period of time, the impact of revisions in cost and revenue estimates during the progress of work may adjust the current period earnings through a cumulative catch-up basis.

This method recognizes, in the

current period, the cumulative effect of the changes on current and prior quarters.

This method recognizes, in the current period, the cumulative effect of the changes on current and prior quarters.

Additionally, if the current contract estimate indicates a loss, a provision is made for the total anticipated loss in the period that it becomes evident.

Contract cost and revenue estimates for significant contracts are generally reviewed and reassessed quarterly.

The net aggregate effects of these changes in estimates on contracts accounted for under the cost-to-cost method in the first nine months of 2023 was $ 1.7 million of favorable operating income compared with $ 30.5 million of favorable operating income in the first nine months of 2022, with the first nine months of 2022 primarily related to favorable changes in estimates that impacted revenue within our Digital Imaging operating segment.

The net aggregate effects of these changes in estimates on contracts accounted for under the cost-to-cost method in the first three months of 2024 was $ 0.3 million of unfavorable operating income compared with $ 2.9 million of favorable operating income in the first three months of 2023.

None of the effects of changes in estimates on any individual contract were material to the consolidated statements of income (loss) for any period presented.

2 unchanged sentences

Digital Imaging Instrumentation Aerospace and Defense Electronics Engineered Systems Total

Balance at January 1, 2023

Balance at December 31, 2023

$ 6,877.0 $ 944.8 $ 163.4 $ 17.6 $ 8,002.8

Current year acquisitions 55.9 — — — 55.9

Foreign currency changes and other ( 38.6 ) ( 7.9 ) ( 0.3 ) — ( 46.8 )

Balance at October 1, 2023

Balance at March 31, 2024

$ 6,838.4 $ 936.9 $ 163.1 $ 17.6 $ 7,956.0

1 unchanged sentence

(in millions):

October 1, 2023 January 1, 2023

March 31, 2024 December 31, 2023

Gross carrying amount Accumulated amortization Net carrying amount Gross carrying amount Accumulated amortization Net carrying amount

14 unchanged sentences

Cash Equivalents

The Company had $ 171.0 million and $ 167.1 million of cash equivalents at October 1, 2023 and January 1, 2023, respectively.

The Company had $ 527.1 million and $ 265.1 million of cash equivalents at March 31, 2024 and December 31, 2023, respectively.

The Company has categorized its cash equivalents as a Level 1 financial asset, measured at fair value based on quoted prices in active markets of identical assets.

Accounts Receivable, net

Accounts receivable is presented net of an allowance for doubtful accounts of $ 10.7 million at October 1, 2023 and $ 11.7 million at January 1, 2023.

Accounts receivable is presented net of an allowance for doubtful accounts of $ 11.4 million at March 31, 2024 and $ 11.5 million at December 31, 2023.

Inventories, net

Inventories are stated at current cost, net of reserves for excess, slow moving and obsolete inventory.

Inventories are primarily valued under the FIFO method or average cost method, with an immaterial amount of inventories valued under the LIFO

Inventories are primarily valued under the FIFO method or average cost method.

Inventory balances are summarized as follows (in millions):

October 1, 2023 January 1, 2023

March 31, 2024 December 31, 2023

Raw materials and supplies $ 571.3 $ 560.6

10 unchanged sentences

Deductions ( 5.1 ) ( 4.2 )

Acquisition 0.2 1.6

Balance at end of period $ 47.5 $ 50.4

1 unchanged sentence

Long-Term Debt (in millions):

October 1, 2023 January 1, 2023

$ 1.15 billion credit facility due March 2026, weighted average variable rate of 5.46 % at January 1, 2023

0.65 % Fixed Rate Senior Notes due April 2023

March 31, 2024 December 31, 2023

$ 1.15 billion credit facility due March 2026

0.95 % Fixed Rate Senior Notes due April 2024

Term loan due October 2024, variable rate of 6.67 % at October 1, 2023 and 5.63 % at January 1, 2023, swapped to a Euro fixed rate of 0.61 %

Term loan due October 2024, variable rate of 6.68 % at March 31, 2024 and 6.71 % at December 31, 2023, swapped to a Euro fixed rate of 0.61 %

1.60 % Fixed Rate Senior Notes due April 2026

Term loan due May 2026, variable rate of 5.61 % at January 1, 2023

2.25 % Fixed Rate Senior Notes due April 2028

7 unchanged sentences

Total long-term debt, net of current portion $ 2,646.1 $ 2,644.8

During the first nine months of 2023, the Company repaid $ 125.0 million of amounts outstanding on its credit facility, the $ 300.0 million Fixed Rate Senior Notes due April 2023, and the remaining $ 245.0 million on its term loan due May 2026.

The Company also repurchased and retired $ 10.0 million of its Fixed Rate Senior Notes due April 2031, recording a $ 1.6 million non-cash gain on the extinguishment of this debt.

At October 1, 2023, $ 1,130.9 million was available under the $ 1.15 billion credit facility, after a reduction of $ 19.1 million in outstanding letters of credit.

Our bank credit agreements require Teledyne to comply with various financial and operating covenants and at October 1, 2023, the Company was in compliance with these covenants.

At March 31, 2024, $ 1,128.2 million was available under the $ 1.15 billion credit facility, after a reduction of $ 21.8 million in outstanding letters of credit.

The Company’s bank credit agreements requires it to comply with various financial and operating covenants and at March 31, 2024, the Company was in compliance with these covenants.

Subsequent to the end of the first quarter of 2024, the Company made a $ 450 million debt maturity payment on the Senior Notes due April 2024.

Teledyne estimates the fair value of its long-term debt based on debt of similar type, rating and maturity and at comparable interest rates.

The Company’s long-term debt is considered a level 2 input in the fair value hierarchy and is valued based on observable market data.

As of October 1, 2023 and January 1, 2023, the aggregate fair values of our borrowings were $ 2,823.4 million and $ 3,492.7 million, respectively, and the carrying values were $ 3,266.4 million and $ 3,947.1 million, respectively.

As of March 31, 2024 and December 31, 2023, the aggregate fair values of our borrowings were $ 2,945.5 million and $ 2,965.3 million, respectively, and the carrying values were $ 3,266.3 million and $ 3,266.0 million, respectively.

The income tax provision is calculated using an estimated annual effective tax rate, based upon estimates of annual income, permanent items, statutory tax rates and planned tax strategies in the various jurisdictions in which we operate except that certain loss jurisdictions and discrete items, such as the resolution of uncertain tax positions and stock-based accounting income tax benefits, are treated separately.

The Company’s effective income tax rate for the third quarter and first nine months of 2023 was 19.2 % and 20.1 %, respectively, compared with an effective income tax rate for the third quarter and first nine months of 2022 of 23.0 % and 14.3 %, respectively.

The third quarter and first nine months of 2023 includes net discrete income tax benefits of $ 6.1 million and $ 14.1 million, respectively, compared with net discrete income tax benefits of $ 0.3 million and $ 57.8 million for the third quarter and first nine months of 2022, respectively.

The third quarter and first nine months of 2023 net discrete income tax benefits include $ 6.5 million and $ 13.7 million, respectively, related to stock-based accounting compared with $ 0.2 million and $ 8.7 million, of net discrete income tax benefits related to stock-based accounting for the third quarter and first nine months of 2022, respectively.

The first nine months of 2022 also includes net discrete income tax benefits of $ 49.1 million primarily related to the change in or resolution of certain acquisition-related tax reserves.

Excluding the net discrete income tax items in both periods, the effective tax rates would have been 21.7 % and 22.1 % for the third quarter and first nine months of 2023, respectively, and 23.1 % for both the third quarter and first nine months of 2022.

Pension Plans

Third Quarter Nine Months

First Quarter

(Dollars in millions) 2024 2023

Provision (benefit) for income taxes $ 46.4 $ 44.9

Discrete event expense (benefit):

Stock-based accounting $ ( 5.3 ) $ ( 5.9 )

Uncertain tax position reserves (primarily acquisition related) 0.3 0.3

Other discrete event expense (benefit) 0.6 ( 0.9 )

Discrete event expense (benefit):

$ ( 4.4 ) $ ( 6.5 )

Provision (benefit) for income taxes without discrete event expense (benefit) $ 50.8 $ 51.4

Income (loss) before income taxes $ 225.5 $ 223.7

Effective tax rate 20.6 % 20.1 %

Effective tax rate without discrete events 22.5 % 23.0 %

Numerous foreign jurisdictions have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development (“OECD”).

A minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million.

Under the Pillar Two rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction.

If the jurisdictional effective tax rate determined under the Pillar Two is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%.

The Company is continuing to monitor the pending implementation of

Pillar Two by individual countries and the potential effects of Pillar Two on our business.

The Company does not expect the provisions effective in 2024 will have a materially adverse impact on its results of operations, financial position or cash flows.

The Inflation Reduction Act of 2022 (“IRA”) levies a 1% excise tax on net stock repurchases after December 31, 2022.

If the Company were to repurchase shares, the excise tax would be recorded as a cost of acquiring treasury stock and is not material.

Additionally, the IRA imposes a 15% corporate alternative minimum tax (“CAMT”) for tax years beginning after December 31, 2022.

The Company does not expect the CAMT to have a material impact on its results of operations or financial position.

Pension Plans

First Quarter

Service cost — benefits earned during the period (in millions) $ 1.5 $ 1.5

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The Company issues shares of common stock upon the exercise of stock options.

Stock-based compensation expense was $ 8.0 million and $ 24.3 million for the third quarter and first nine months of 2023, respectively, and $ 6.7 million and $ 22.1 million for the third quarter and first nine months of 2022, respectively.

Stock option activity for the third quarter and first nine months of 2023 is as follows:

Third Quarter Nine Months

Shares Weighted Average Exercise Price Shares Weighted Average

Exercise Price

Stock-based compensation expense was $ 12.0 million for the first quarter of 2024 and $ 7.9 million first quarter of 2023.

Stock option activity for the first quarter of 2024 is as follows:

First Quarter

Shares Weighted Average Exercise Price

Beginning balance 1,337,972 $ 223.43

Granted 67,003 $ 441.98

Exercised ( 83,027 ) $ 109.33

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Exercisable at end of period 1,108,192 $ 241.34

Restricted stock activity for the first nine months of 2023 is as follows:

Restricted stock activity for the first three months of 2024 is as follows:

Shares Weighted average fair value per share

Balance at January 1, 2023

Balance at December 31, 2023

123,089 $ 364.86

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Forfeited/Canceled ( 3,256 ) $ 373.66

Balance at October 1, 2023

Balance at March 31, 2024

188,237 $ 394.81

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The weighted average number of common shares used in the calculation of basic and diluted earnings per share consisted of the following (in millions):

Third Quarter Nine Months

2023 2022 2023 2022

First Quarter

Weighted average basic common shares outstanding 47.3 46.9

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Weighted average diluted common shares outstanding 48.0 47.9

For the third quarter and first nine months of 2023 and 2022, the Company excluded approximately 0.2 million of stock options in the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive.

For the first quarter of 2024 and 2023, the Company excluded approximately 0.2 million of stock options in the computation of diluted earnings per share because the effect of their inclusion would have been anti-dilutive.

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) ("AOCI") by component, net of tax, for the third quarter and nine months ended October 1, 2023 and October 2, 2022 are as follows (in millions):

Foreign Currency Translation Cash Flow Hedges and Other Pension and Postretirement Benefits Total

Balance at July 2, 2023

$ ( 464.3 ) $ 5.4 $ ( 253.1 ) $ ( 712.0 )

Other comprehensive income (loss) before reclassifications ( 76.6 ) 2.4 — ( 74.2 )

Amounts reclassified from AOCI — ( 3.5 ) 1.8 ( 1.7 )

Net other comprehensive income (loss) ( 76.6 ) ( 1.1 ) 1.8 ( 75.9 )

Balance at October 1, 2023

$ ( 540.9 ) $ 4.3 $ ( 251.3 ) $ ( 787.9 )

Foreign Currency Translation Cash Flow Hedges and Other Pension and Postretirement Benefits Total

Balance at July 3, 2022

$ ( 316.4 ) $ 0.8 $ ( 289.4 ) $ ( 605.0 )

Other comprehensive income (loss) before reclassifications ( 357.1 ) 7.7 — ( 349.4 )

Amounts reclassified from AOCI — ( 13.9 ) 4.1 ( 9.8 )

Net other comprehensive income (loss) ( 357.1 ) ( 6.2 ) 4.1 ( 359.2 )

Balance at October 2, 2022

$ ( 673.5 ) $ ( 5.4 ) $ ( 285.3 ) $ ( 964.2 )

The changes in accumulated other comprehensive income (loss) ("AOCI") by component, net of tax, for the first quarter ended March 31, 2024 and April 2, 2023 are as follows (in millions):

Foreign Currency Translation Cash Flow Hedges and Other Pension and Postretirement Benefits Total

Balance as of January 1, 2023

Balance at December 31, 2023

$ ( 392.7 ) $ 8.2 $ ( 249.6 ) $ ( 634.1 )

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Net other comprehensive income (loss) ( 88.8 ) ( 4.2 ) 2.1 ( 90.9 )

Balance as of October 1, 2023

Balance at March 31, 2024

$ ( 481.5 ) $ 4.0 $ ( 247.5 ) $ ( 725.0 )

Foreign Currency Translation Cash Flow Hedges and Other Pension and Postretirement Benefits Total

Balance as of January 2, 2022

Balance at January 1, 2023

$ ( 472.3 ) $ 1.3 $ ( 255.5 ) $ ( 726.5 )

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Net other comprehensive income (loss) ( 4.3 ) 2.5 1.5 ( 0.3 )

Balance as of October 2, 2022

Balance at April 2, 2023

$ ( 476.6 ) $ 3.8 $ ( 254.0 ) $ ( 726.8 )

The reclassifications out of AOCI to net income for the third quarter and nine months ended October 1, 2023 and October 2, 2022 are as follows (in millions):

The reclassifications out of AOCI to net income for the first quarter ended March 31, 2024 and April 2, 2023 are as follows (in millions):

Amount Reclassified from AOCI for the Quarter Ended Amount Reclassified from AOCI for the Quarter Ended Statement of Income (Loss) Presentation

October 1, 2023 October 2, 2022

(Gain) loss on cash flow hedges:

Gain recognized in income on derivatives $ ( 4.6 ) $ ( 18.5 ) See Note 13

Income tax impact 1.1 4.6 Provision for income taxes

Total $ ( 3.5 ) $ ( 13.9 )

Amortization of defined benefit pension and postretirement plan items:

Amortization of prior service cost $ ( 0.4 ) $ ( 0.4 ) Costs and expenses

Amortization of net actuarial loss 2.7 5.8 Costs and expenses

Total before tax 2.3 5.4

Income tax impact ( 0.5 ) ( 1.3 ) Provision for income taxes

Total $ 1.8 $ 4.1

Amount Reclassified from AOCI for the Nine Months Ended

Statement of Income (Loss) Presentation

October 1, 2023 October 2, 2022

March 31, 2024 April 2, 2023

(Gain) loss on cash flow hedges:

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These contracts are designated and qualify as cash flow hedges.

As of October 1, 2023, the Company had foreign currency forward contracts to buy Canadian dollars and to sell U.S.

As of March 31, 2024, the Company had foreign currency forward contracts to buy Canadian dollars and to sell U.S.

dollars totaling $ 131.3 million.

These foreign currency forward contracts have maturities ranging from December 2023 to February 2025.

As of October 1, 2023, the Company had foreign currency forward contracts to buy British pounds and to sell U.S.

These foreign currency forward contracts have maturities ranging from June 2024 to February 2026.

As of March 31, 2024, the Company had foreign currency forward contracts to buy British pounds and to sell U.S.

dollars totaling $ 12.7 million.

These foreign currency forward contracts have maturities ranging from December 2023 to February 2024.

These foreign currency forward contracts have maturities ranging from June 2024 to February 2025.

The Company utilizes foreign currency forward contracts to mitigate foreign exchange rate risk associated with foreign currency denominated monetary assets and liabilities, including intercompany receivables and payables.

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This cross currency swap is designated as cash flow hedge.

As of October 1, 2023, the Company has a cross currency swap outstanding with a notional amount of € 156.0 million and $ 150.0 million that matures in October 2024.

As of March 31, 2024, the Company has a cross currency swap outstanding with a notional amount of € 156.0 million and $ 150.0 million that matures in October 2024.

All derivative instruments are recorded on the condensed consolidated balance sheets at fair value.

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The amount recorded within AOCI is reclassified into earnings in the same period during which the underlying hedged transaction affects earnings.

The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the third quarter and nine months ended October 1, 2023 and October 2, 2022 was as follows (in millions):

Third Quarter Nine Months

2023 2022 2023 2022

The effect of derivative instruments designated as cash flow hedges in the condensed consolidated financial statements for the first quarter ended March 31, 2024 and April 2, 2023 was as follows (in millions):

First Quarter

Net gain (loss) recognized in AOCI - Foreign Exchange Contracts (a) $ 0.7 $ 13.6

Net gain (loss) reclassified from AOCI into revenue - Foreign Exchange Contracts (a) $ 0.7 $ ( 1.9 )

Net gain (loss) recognized in AOCI - Interest Rate Contracts $ — $ 0.3 — $ 2.3

Net gain (loss) reclassified from AOCI into other income and expense, net - Foreign Exchange Contracts (b) $ 3.7 $ 10.1

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(b) Amount reclassified to offset earnings impact of liability hedged by cross currency swap

Net deferred losses recorded in AOCI for the forward contracts that will mature in the next twelve months total $ 0.3 million, net of taxes.

These losses are expected to be offset by anticipated gains in the value of the forecasted underlying hedged item.

Net deferred gains recorded in AOCI for the forward contracts that will mature in the next twelve months total $ 1.0 million, net of taxes.

These gains are expected to be offset by anticipated losses in the value of the forecasted underlying hedged item.

Amounts related to the cross currency swap expected to be reclassified from AOCI into income in the next twelve months total $ 3.5 million.

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For a derivative instrument that has not been designated as an accounting hedge, the change in the fair value is recognized immediately in earnings.

As of October 1, 2023, the Company had foreign currency forward contracts not designated as accounting hedges primarily in the following types and pairs (in millions):

As of March 31, 2024, the Company had foreign currency forward contracts not designated as accounting hedges primarily in the following types and pairs (in millions):

Contracts to Buy Contracts to Sell

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Dollars US$ 222.1

Canadian Dollars $ 12.6 Euros € 8.6

Danish Krone DKR 154.8 U.S.

Dollars US$ 22.5

Euros € 80.7 U.S.

Dollars US$ 87.5

Great Britain Pounds £ 5.3 Euros € 6.2

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Dollars US$ 88.9

Dollars US$ 17.0 Euros € 15.8

Norwegian Krone kr 179.0 U.S.

Dollars US$ 16.9

Swedish Krona SEK 284.3 Euros € 26.1

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Dollars US$ 29.3

Dollars US$ 6.7 Chinese Yuan ¥ 49.0

The preceding table includes non-designated hedges derived from terms contained in previously designated cash flow hedges.

The gains and losses on these derivatives instruments which are not designated as accounting hedges are intended to, at a minimum, partially offset the transaction gains and losses recognized in earnings.

The effect of derivative instruments not designated as accounting hedges recognized in other income and expense for the third quarter and nine months ended October 1, 2023 was expense of $ 12.9 million and $ 3.1 million, respectively.

The effect of derivative instruments not designated as accounting hedges in other income and expense for the third quarter and nine months ended October 2, 2022 was expense of $ 40.5 million and $ 70.9 million, respectively.

The effect of derivative instruments not designated as accounting hedges recognized in other income and expense for the first quarter ended March 31, 2024 was expense of $ 9.3 million.

The effect of derivative instruments not designated as accounting hedges in other income and expense for the first quarter ended April 2, 2023 was income of $ 7.8 million.

The income or expense was largely offset by losses or gains in the value of the underlying hedged item excluding the impact of forward points.

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All fair values for these derivative instruments were measured using Level 2 inputs in the fair value hierarchy (in millions):

Asset/(Liability) Derivative Instruments Balance sheet location October 1, 2023 January 1, 2023

Asset/(Liability) Derivative Instruments Balance sheet location March 31, 2024 December 31, 2023

Derivatives designated as hedging instruments:

Cash flow forward contracts Other current assets $ 1.2 $ 3.7

Cash flow forward contracts Accrued liabilities ( 1.2 ) ( 6.8 )

Interest rate contracts Other current assets — 0.7

Cash flow forward contracts Other non-current assets 0.6 2.4

Interest rate contracts Other current assets (accrued interest) 0.1 0.1

Cash flow cross currency swap Other current assets ( 17.3 ) ( 21.3 )

Cash flow cross currency swap Accrued liabilities — ( 14.0 )

Cash flow cross currency swap Other long-term liabilities ( 16.7 ) ( 18.3 )

Total derivatives designated as hedging instruments ( 15.4 ) ( 15.1 )

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Trade Compliance Matters

Effective April 24, 2022, the United States Department of State’s Office of Defense Trade Controls Compliance (“DDTC”) closed the four-year Consent Agreement that had been entered into by FLIR Systems, Inc.

("FLIR"), to resolve various export allegations under the International Traffic in Arms Regulations (“ITAR”).

In connection with this Consent Agreement and other export matters, while FLIR and its successor by mergers, Teledyne FLIR, have enhanced the trade compliance program more broadly, implemented remedial measures and have undergone external and internal audits of the trade compliance program, adverse disclosures and findings could cause additional expenses in connection with further remedial measures or potential penalties.

The Company has made other voluntary disclosures to the U.S.

The Company has made voluntary disclosures to the U.S.

Department of State and the U.S.

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for certain potential violations of local export laws.

At this time, based on available information, we are unable to reasonably estimate the time it may take to resolve these matters or the amount or range of potential loss, penalty or other government

action, if any, that may be incurred in connection with these matters.

At this time, based on available information, we are unable to reasonably estimate the time it may take to resolve these matters or the amount or range of potential loss, penalty or other government action, if any, that may be incurred in connection with these matters.

However, an unfavorable outcome could result in substantial fines and penalties or loss or suspension of export privileges or of particular authorizations that could be material to the Company’s financial position, results of operations or cash flows in and following the period in which such outcome becomes estimable or known.

Environmental Remediation Obligations

At October 1, 2023, the Company’s reserves for environmental remediation obligations totaled $ 5.5 million, of which $ 1.5 million is included in current accrued liabilities.

At January 1, 2023, the Company’s reserves for environmental remediation obligations totaled $ 5.8 million.

At March 31, 2024, the Company’s reserves for environmental remediation obligations totaled $ 5.5 million, of which $ 1.7 million is included in current accrued liabilities.

At December 31, 2023, the Company’s reserves for environmental remediation obligations totaled $ 5.4 million.

The Company evaluates whether it may be able to recover a portion of future costs for environmental liabilities from its insurance carriers and from third parties.

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Subsequent Events

On October 13, 2023, the Company acquired Xena Networks ApS and affiliates ("Xena Networks").

Xena Networks, headquartered in Denmark, is a leading provider of high-speed terabit ethernet validation, quality assurance, and production test solutions.

Xena Networks is part of the test and measurement instrumentation product line within the Instrumentation segment.

On February 13, 2024, the Company announced that it entered into an agreement to acquire Adimec Holding B.V.

and its subsidiaries (“Adimec”).

Adimec, founded in 1992 and headquartered in Eindhoven, Netherlands, develops customized high-performance industrial and scientific cameras.

The closing of the transaction, which is subject to customary conditions and approvals, is anticipated to occur in the first half of 2024.

Adimec will be part of the Digital Imaging segment.

On April 10, 2024, the Company acquired Valeport Holdings 2019 Limited and its affiliates ("Valeport").

Valeport, founded in 1969 and headquartered in Totnes, United Kingdom, designs and manufactures underwater sensors for environmental, energy, construction and defense applications.

Valeport is part of the marine instrumentation product line within the Instrumentation segment.

Subsequent to the end of the first quarter of 2024, the Company made a $ 450 million debt maturity payment on the Senior Notes due April 2024.

On April 23, 2024, the Board of Directors of the Company authorized a stock repurchase program to repurchase up to $ 1.25 billion of Teledyne’s common stock.

This authorization superseded prior open stock repurchase programs authorized by the Board of Directors.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

Teledyne provides enabling technologies for industrial growth markets that require advanced technology and high reliability.

These markets include factory automation and condition monitoring, aerospace and defense, air and water quality environmental monitoring, electronics design and development, medical imaging and pharmaceutical research, oceanographic research, and deepwater energy exploration and production.

Teledyne is a global sensing and decision-support technology company:

providing specialty sensors, cameras, instrumentation, algorithms and software across the electromagnetic spectrum, as well as unmanned systems, in the subsea, land and air domains.

These markets include aerospace and defense, factory automation, air and water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging and pharmaceutical research.

Our products include digital imaging sensors, cameras and systems within the visible, infrared and X-ray spectra, monitoring and control instrumentation for marine and environmental applications, harsh environment interconnects, electronic test and measurement equipment, aircraft information management systems, and defense electronics and satellite communication subsystems.

We also supply engineered systems for defense, space, environmental and energy applications.

We differentiate ourselves from many of our direct competitors by having a customer- and Company-sponsored applied research center that augments our product development expertise.

We believe that technological capabilities and innovation and the ability to invest in the development of new and enhanced products are critical to obtaining and maintaining leadership in our markets and the industries in which we compete.

We believe our technological capabilities, innovation and the ability to invest in the development of new and enhanced products are critical to obtaining and maintaining leadership in our markets and the industries in which we compete.

Our strategy continues to emphasize growth in our four business segments:

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The markets in which we sell our enabling technologies are characterized by high barriers to entry and include specialized products and services not likely to be commoditized.

We intend to strengthen and expand our core businesses with targeted acquisitions and through product development.

We continue to focus on balanced and disciplined capital deployment among capital expenditures, acquisitions and product development.

We aggressively pursue operational excellence to continually improve our margins and earnings by emphasizing cost containment and cost reductions in all aspects of our business.

We intend to strengthen and expand our business with targeted acquisitions and through product development.

We continue to focus on balanced and disciplined capital deployment among capital expenditures, acquisitions, product development and once again stock repurchases.

We aggressively pursue operational excellence to continually improve our margins and earnings by emphasizing cost containment and evaluating cost reductions in all aspects of our business.

At Teledyne, operational excellence includes the rapid integration of the businesses we acquire.

Using complementary technology across our businesses and through targeted research and development, we seek to create new products to grow our company and expand our addressable markets.

We continue to evaluate our businesses to ensure that they are aligned with our strategy.

As part of our continuing FLIR acquisition integration efforts, and as we accelerate the relocation of select Teledyne FLIR operations to existing sites, we recorded $5.8 million of employee separation costs, facility consolidation costs and facility lease impairments in the third quarter of 2023.

We expect to record an additional $3.0 million to $4.0 million of pretax costs in the next six months related to employee separation costs, facility consolidation costs and facility lease impairments.

Consistent with our strategy, we completed one acquisition in the first nine months of 2023 and two acquisitions in 2022, which were all part of the Digital Imaging segment.

The financial results of these acquisitions have been included since the respective date of each acquisition.

Subsequent to the end of the third quarter of 2023, we completed one acquisition, which is part of the Instrumentation segment.

We continually evaluate our businesses to ensure that they are aligned with our strategy.

Consistent with our strategy, we completed two acquisitions in 2023.

The financial results of the completed acquisitions have been included since the respective date of each acquisition.

Subsequent to the end of the first quarter of 2024, we completed one acquisition, which is part of the Instrumentation segment.

See Note 2 and Note 15 for additional information about our recent acquisitions.

Trends Affecting Our Business and Other Matters

We had previously assumed no full year sales growth in industrial automation as well as test and measurement markets.

However, those markets weakened more than planned in the first quarter, and we now forecast full year sales for products in these markets to decline meaningfully in 2024.

We have experienced supply chain challenges, including long lead times, as well as cost inflation for parts and components, logistics and labor due to availability constraints and high demand.

These supply chain challenges have also delayed our ability to timely convert backlog to revenue.

Although perhaps to a lesser extent compared to recent quarters, we expect inflationary impacts and supply chain constraints to continue through the fourth quarter of 2023 and likely into 2024.

Although perhaps to a lesser extent compared to recent years, we expect cost inflation impacts and supply chain constraints to continue into 2024.

Sales recorded and costs incurred recorded by subsidiaries operating outside of the United States are translated into U.S.

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We do not have material assets in Israel.

Our total net sales from Israel in the first nine months of 2023 and the full year 2022 was less than 1% of total net sales, respectively.

Our total net sales from Israel in the first three months of 2024 and the full year 2023 was approximately 1% of total net sales, respectively.

It is too early to determine the full extent of the impact this conflict could have on our business and our operations, including the impact to our suppliers from these regions, and our assessment of the potential impacts is ongoing.

As part of a continuing effort to reduce costs and improve operating performance, we may take and have taken actions to consolidate and relocate certain facilities and reduce headcount across various businesses, reducing our exposure to weaker end markets.

We continue to seek cost reductions in our businesses.

Results of Operations

Third Quarter % Nine Months %

(in millions) 2023 2022 Change 2023 2022 Change

First Quarter %

(in millions) 2024 2023 Change

Net sales $ 1,350.1 $ 1,383.3 (2.4) %

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Interest and debt income (expense), net (12.7) (21.0) (39.5) %

Gain (loss) on debt extinguishment — — —% 1.6 10.6 (84.9) %

Non-service retirement benefit income (expense) 2.7 3.3 (18.2) %

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* not meaningful

Third Quarter % Nine Months %

(dollars in millions) 2023 2022 Change 2023 2022 Change

First Quarter %

(dollars in millions) 2024 2023 Change

Net sales (a):

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Total operating income (loss) $ 234.3 $ 242.5 (3.4) %

(a) Net sales exclude inter-segment sales of $7.2 million and $21.5 million for the third quarter and first nine months of 2023, respectively, and $4.8 million and $15.4 million for the third quarter and first nine months of 2022, respectively.

Third Quarter Results

The following is a discussion of our 2023 third quarter results compared with the third quarter results of 2022.

(a) Net sales exclude inter-segment sales of $4.8 million and $6.2 million for the first quarter and first three months of 2024 and 2023, respectively,

First Quarter Results

The following is a discussion of our 2024 first quarter results compared with the first quarter results of 2023.

Comparisons are with the corresponding reporting period of 2023, unless noted otherwise.

Third quarter of 2023 compared with the third quarter of 2022

Our third quarter of 2023 net sales increased 2.9%.

Net income for the third quarter of 2023 increased 11.4%, driven primarily by higher net sales and favorable product mix.

Net income per diluted share was $4.15 for the third quarter of 2023, compared with net income per diluted share of $3.74.

The third quarter of 2023 net sales, compared with the third quarter of 2022, reflected higher net sales in each segment other than the Digital Imaging segment, which decreased slightly.

The third quarter of 2023 also included $25.8 million in incremental sales from recent acquisitions.

First quarter of 2024 compared with the first quarter of 2023

Our first quarter of 2024 net sales decreased 2.4%.

Net income attributable to Teledyne for the first quarter of 2024 decreased 0.1%.

Net income per diluted share was $3.72 for the first quarter of 2024, compared with net income per diluted share of $3.73.

The first quarter of 2024 net sales, compared with the first quarter of 2023, reflected lower net sales in each segment other than the Aerospace and Defense Electronics segment.

Cost of Sales

Cost of sales increased $11.4 million in the third quarter of 2023.

Cost of sales as a percentage of net sales decreased for the third quarter of 2023 to 56.8% from 57.6%.

Cost of sales decreased $20.5 million in the first quarter of 2024 primarily driven by lower net sales.

Cost of sales as a percentage of net sales decreased slightly for the first quarter of 2024 to 57.0% from 57.2%.

Selling, General and Administrative Expense

SG&A expense, including research and development expense, increased $8.2 million in the third quarter of 2023.

SG&A expense as a percentage of net sales was 20.8% for both the third quarter of 2023 and 2022.

Corporate expense, which is included in SG&A expense, was $17.8 million for the third quarter of 2023, compared with $15.8 million, with the increase primarily related to higher professional fees during the period.

Stock-based compensation expense was $8.0 million for the third quarter of 2023 compared with $6.7 million.

The third quarter of 2023 also included $5.8 million of FLIR-related integration costs, including employee separation costs, facility consolidation costs and facility lease impairments with no comparable amount in the previous year.

SG&A expense, including research and development expense, decreased $4.2 million in the first quarter of 2024.

SG&A expense as a percentage of net sales was 21.9% for the first quarter of 2024, compared with 21.8%.

Corporate expense, which is included in SG&A expense, was $20.1 million for the first quarter of 2024, compared with $17.4 million, with the increase primarily related to higher compensation expense, including higher stock-based compensation expense.

Stock-based compensation expense was $12.0 million for the first quarter of 2024 compared with $7.9 million.

The first quarter of 2024 also included $2.2 million of FLIR-related integration costs, including employee separation costs, facility consolidation costs and facility lease impairments with no comparable amount in the previous year.

Acquired Intangible Asset Amortization

Acquired intangible asset amortization for the third quarter of 2023 was $49.1 million compared with $48.9 million.

Acquired intangible asset amortization for the first quarter of 2024 was $49.4 million compared with $49.7 million.

Pension Service Expense

Pension service expense is included in both cost of sales and SG&A expense.

For the third quarter of 2023, pension service expense was $1.5 million, compared with $2.2 million.

For 2023, the weighted-average discount rate used to determine the benefit obligation for the domestic qualified pension plans is 5.71% compared with 2.97% in 2022.

Operating Income

Operating income for the third quarter of 2023 increased 7.8%.

The third quarter of 2023, compared with the third quarter of 2022, reflected higher operating income in each business segment other than the Engineered Systems segment.

Non-operating Income and Expense

Interest and debt expense, net of interest income, was $18.4 million for the third quarter of 2023, compared with $22.0 million, with the decrease related to reduced outstanding borrowings with lower weighted average interest rates compared to the third quarter of 2022.

Non-service retirement benefit income was $3.1 million for the third quarter of 2023 compared with $2.9 million.

Other income and expense, net was expense of $2.9 million for the third quarter of 2023 compared with income of $5.2 million for the third quarter of 2022, with the difference primarily related foreign exchange losses in the third quarter of 2023 compared with foreign exchange gains in the third quarter of 2022.

The third quarter of 2022 also included higher income from deferred compensation plan activity.

The Company’s effective income tax rate for the third quarter of 2023 was 19.2% compared with an effective income tax rate of 23.0% for the third quarter of 2022.

The third quarter of 2023 includes net discrete income tax benefits of $6.1 million compared with net discrete income tax benefits of $0.3 million.

The third quarter of 2023 net discrete income tax benefits include $6.5 million related to stock-based accounting compared with $0.2 million.

Excluding the net discrete income tax items in both periods, the effective rate would have been 21.7% for the third quarter of 2023 and 23.1% for the third quarter of 2022.

First nine months of 2023 compared with the first nine months of 2022

The first nine months of 2023 net sales increased 4.2%.

Net income for the first nine months of 2023 increased 0.1%.

Net income per diluted share was $11.75 for the first nine months of 2023, compared with net income per diluted share of $11.79.

The first nine months of 2023 net sales, compared with the first nine months of 2022 net sales, reflected higher net sales in each segment.

The first nine months of 2023 also included $79.7 million in incremental sales from recent acquisitions.

Cost of Sales

Cost of sales increased $67.2 million in the first nine months of 2023.

Cost of sales as a percentage of net sales decreased for the first nine months of 2023 to 56.9% from 57.6%.

Selling, General and Administrative Expense

SG&A expense, including research and development expense, increased $43.9 million in the first nine months of 2023.

SG&A expense as a percentage of net sales for the first nine months of 2023 increased slightly to 21.5% from 21.3%.

Corporate expense, which is included in SG&A expense, was $49.8 million for the first nine months of 2023, compared with $46.6 million, with the increase primarily related to higher professional fees during the period.

Stock-based compensation expense was $24.3 million for the first nine months of 2023 compared with $22.1 million.

The first nine months of 2023 also included $5.8 million of FLIR-related integration costs, including employee separation costs, facility consolidation costs and facility lease impairments.

Acquired Intangible Asset Amortization

Acquired intangible asset amortization for the first nine months of 2023 was $148.1 million compared with $153.8 million, with the decrease from the previous year related primarily to foreign currency translation impacts, finalization of FLIR purchase accounting in the second quarter of 2022 and certain finite-lived intangibles within the test and measurement instrumentation product line becoming fully amortized in the third quarter of 2022.

Pension Service Expense

Pension service expense is included in both cost of sales and selling general and administrative expense.

For the first nine months of 2023, pension service expense was $4.5 million compared with $6.5 million.

For the first quarter of 2024 and 2023, pension service expense was $1.5 million.

For 2024, the weighted-average discount rate used to determine the benefit obligation for the domestic qualified pension plans is 6.86% compared with 5.71% in 2023.

Operating Income

Operating income for the first nine months of 2023 increased 9.3%.

The first nine months of 2023, compared with the first nine months of 2022, reflected higher operating income in each business segment.

Operating income for the first quarter of 2024 decreased 3.4%.

The first quarter of 2024, compared with the first quarter of 2023, reflected lower operating income in the Digital Imaging and Engineered Systems segment, partially offset by higher operating income in the Aerospace and Defense Electronics and Instrumentation segments.

Non-operating Income and Expense

Interest and debt expense, net of interest income, was $61.7 million for the first nine months of 2023, compared with $66.8 million.

Non-service retirement benefit income was $9.3 million for the first nine months of 2023 compared with $8.6 million for the first nine months of 2022.

Other income and expense, net was expense of $7.4 million for the first nine months of 2023 compared with $5.2 million of other income for the first nine months of 2022, with the difference primarily related to foreign exchange losses in the first nine months of 2023 compared with foreign exchange gains in the first nine months of 2022.

The Company’s effective income tax rate for the first nine months of 2023 was 20.1% compared with an effective income tax rate of 14.3% for the first nine months of 2022.

The first nine months of 2023 includes net discrete income tax benefits of $14.1 million compared with net discrete income tax benefits of $57.8 million.

The first nine months of 2023 net discrete tax benefits include $13.7 million related to stock-based accounting as compared with $8.7 million.

The first nine months of 2022 also includes net discrete income tax benefits of $49.1 million primarily related to the change in or resolution of certain acquisition-related tax reserves.

Excluding the net discrete income tax items in both periods, the effective tax rates would have been 22.1% for the first nine months of 2023 and 23.1% for the first nine months of 2022.

Interest and debt expense, net of interest income, was $12.7 million for the first quarter of 2024, compared with $21.0 million, with the decrease related to reduced outstanding borrowings with lower weighted average interest rates compared to the first quarter of 2023.

Non-service retirement benefit income was $2.7 million for the first quarter of 2024 compared with $3.3 million.

Other income and expense, net was income of $1.2 million for the first quarter of 2024 compared with expense of $1.1 million for the first quarter of 2023, with the difference primarily related foreign exchange gains in the first quarter of 2024 compared with foreign exchange losses in the first quarter of 2023.

The first quarter income tax provision considers income, permanent items, tax credits, and various statutory tax rates.

In both years, the first quarter discrete impact is primarily tax on stock-based compensation.

First Quarter

(Dollars in millions) 2024 2023

Provision (benefit) for income taxes $ 46.4 $ 44.9

Discrete event expense (benefit):

$ (4.4) $ (6.5)

Provision (benefit) for income taxes without discrete event expense (benefit) $ 50.8 $ 51.4

Income (loss) before income taxes $ 225.5 $ 223.7

Effective tax rate 20.6% 20.1%

Effective tax rate without discrete events 22.5% 23.0%

Segment Results

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Digital Imaging

Third Quarter Change Nine Months Change

First Quarter Change

(dollars in millions) 2024 2023 $ %

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Operating income 15.4 % 15.8 %

Third quarter of 2023 compared with the third quarter of 2022

The third quarter of 2023 net sales included $25.8 million in incremental sales from recent acquisitions, as well as greater sales of x-ray products, infrared imaging detectors and surveillance systems, offset by lower sales of unmanned ground systems for defense applications, micro-electro-mechanical systems (“MEMS”), commercial maritime products and industrial imaging cameras.

Cost of sales decreased primarily due to favorable product mix as well as the decrease in net sales.

As a result of more

favorable product mix, the cost of sales percentage decreased during the period.

SG&A expense and SG&A expense as a percentage of net sales increased primarily due to higher selling expense, including travel costs.

The third quarter of 2023 also included $5.8 million of FLIR-related integration costs, including employee separation costs, facility consolidation costs and facility lease impairments.

Acquired intangible asset amortization expense increased slightly during the period.

Operating income increased primarily due to favorable product mix during the period, and operating income as a percentage of net sales increased slightly during the period.

First nine months of 2023 compared with the first nine months of 2022

Net sales increased primarily due to $79.7 million of increme ntal sales from acquisitions as well as greater sales of x-ray products, commercial infrared imaging components and solutions, and industrial and scientific cameras sales, partially offset by lower sales of unmanned ground systems for defense applications, commercial maritime products and MEMS.

Cost of sales decreased primarily due to favorable product mix partially offset by increased net sales, and the cost of sales percentage decreased during the period due to favorable product mix.

SG&A expense and SG&A expense as a percentage of net sales increased primarily due to the impact of higher net sales, higher selling expense, including travel costs as well as increased research and development expense of $11.1 million.

Acquired intangible asset amortization expense decreased primarily due to foreign currency translation impacts as well as finalization of FLIR purchase accounting in the second quarter of 2022.

Operating income increased primarily due to increased net sales and favorable product mix, and operating income as a percentage of net sales increased slightly during the period.

First quarter of 2024 compared with the first quarter of 2023

Net sales decreased primarily due to lower sales of industrial imaging cameras due to end market weakness as well as lower sales of micro-electro-mechanical systems (“MEMS”), partially offset by higher sales of infrared detectors and subsystems as well as unmanned systems.

Cost of sales decreased primarily due to decreased net sales partially offset by product mix.

As a result of less favorable product mix, the cost of sales percentage increased during the period.

SG&A expense and SG&A expense as a percentage of net sales decreased primarily due to lower research and development costs, partially offset by higher severance and facility consolidation cost.

Operating income decreased primarily due to unfavorable product mix during the period, and operating income as a percentage of net sales decreased slightly during the period.

Instrumentation

Third Quarter Change Nine Months Change

First Quarter Change

(dollars in millions) 2024 2023 $ %

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Operating income 26.0 % 24.2 %

Third quarter of 2023 compared with the third quarter of 2022

Net sales increased due to higher sales at our marine instrumentation and test and measurement instrumentation product lines.

Sales of marine instrumentation increased $22.5 million due to the ongoing recovery in offshore energy markets, and sales of test and measurement instrumentation increased $2.0 million, respectively.

Sales of environmental instrumentation decreased $1.8 million.

Cost of sales increased primarily due to higher net sales.

The cost of sales percentage decreased due to favorable product mix.

SG&A expense increased due to higher net sales partially offset by $0.3 million of lower research and development expense, and SG&A expense as a percentage of net sales decreased in the period due to primarily to lower research and development expense on higher net sales.

Acquired intangible asset amortization expense decreased primarily due to certain finite-lived intangibles within the test and measurement instrumentation line becoming fully amortized in the third quarter of 2022.

Operating income increased primarily due to higher net sales and product mix.

Operating income as a percentage of net sales increased primarily due to higher net sales and product mix as well as lower research and development expense.

For nine months of 2023 compared with the first nine months of 2022

Net sales increased due to higher sales across all product lines.

Sales of marine instrumentation increased $50.9 million due to the ongoing recovery in offshore energy markets, sales of test and measurement instrumentation increased $10.4 million, and sales of environmental instrumentation increased $1.9 million, respectively.

Cost of sales increased primarily due to higher net sales, and the cost of sales percentage decreased slightly due to favorable product mix.

SG&A expense increased due to higher net sales partially offset by $0.3 million of lower research and

development expense.

SG&A expense as a percentage of net sales decreased in the period primarily due to lower research and development expense.

Operating income increased primarily due to higher net sales and product mix.

Operating income as a percentage of net sales increased primarily due to increased net sales and product mix, lower research and development expense and lower acquired intangible asset amortization.

First quarter of 2024 compared with the first quarter of 2023

Net sales decreased due to lower sales at our test and measurement instrumentation and environmental instrumentation product lines, partially offset by increased sales in our marine instrumentation product line.

Sales of marine instrumentation increased $19.6 million due to the ongoing recovery in offshore energy markets.

Sales of test and measurement instrumentation and environmental instrumentation decreased $15.9 million and $6.8 million, respectively, due to end market weakness.

Cost of sales decreased primarily due to lower net sales.

The cost of sales percentage decreased due to favorable product mix, including increased margins in our marine instrumentation product line.

SG&A expense increased slightly due to higher research and development expense in the period, and SG&A expense as a percentage of net sales also increased slightly.

Operating income increased primarily due to stronger marine instrumentation sales and improved margins, and operating income as a percentage of net sales increased due to improved product margins at marine instrumentation.

Aerospace and Defense Electronics

Third Quarter Change Nine Months Change

First Quarter Change

(dollars in millions) 2024 2023 $ %

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Operating income 28.0 % 27.1 %

Third quarter of 2023 compared with the third quarter of 2022

Net sales increased due to a $7.0 million increase for aerospace electronics and a $6.8 million increase for defense electronics.

Cost of sales increased primarily due to higher net sales, and the cost of sales percentage decreased due to favorable product mix.

SG&A expense increased primarily due to higher net sales, and the SG&A expense percentage was consistent with the previous period.

First quarter of 2024 compared with the first quarter of 2023

Net sales increased due to a $10.1 million increase in aerospace electronics and a $2.4 million increase in defense electronics.

Cost of sales increased primarily due to higher net sales, and the cost of sales percentage decreased due to favorable product mix, including higher sales at aerospace electronics.

SG&A expense increased primarily due to higher net sales.

Operating income and operating income as a percent of net sales increased primarily due to increased net sales and favorable product mix during the period.

First nine months of 2023 compared with the first nine months of 2022

Net sales increased due to a $20.4 million increase for defense electronics and a $17.6 million increase for aerospace electronics.

Cost of sales increased primarily due to higher net sales partially offset by favorable product mix and increased margins, and the cost of sales percentage decreased as a result.

SG&A expense as well as the SG&A expense percentage increased primarily due to higher compensation costs.

Operating income and operating income as a percent of net sales increased primarily due to increased net sales during the period, favorable product mix and increased product margins.

Engineered Systems

Third Quarter Change Nine Months Change

First Quarter Change

(dollars in millions) 2024 2023 $ %

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Operating income 2.9 % 9.6 %

Third quarter of 2023 compared with the third quarter of 2022

Net sales increased due to higher sales of $2.7 million for engineered products and higher sales of $1.8 million for energy systems.

Cost of sales increased primarily due to higher net sales.

The cost of sales percentage increased during the period due to a higher percentage of cost-reimbursable type space programs in the third quarter 2023, which typically carry a lower margin than fixed price contracts.

SG&A expense increased slightly, and SG&A expense as a percentage of net sales stayed consistent with the previous year.

Operating income and operating income as a percentage of net sales decreased primarily due to program mix.

First nine months of 2023 compared with the first nine months of 2022

Net sales increased due primarily to higher sales of $22.3 million for engineered products and higher sales of $9.2 million for energy systems.

Cost of sales increased primarily due to higher net sales.

The cost of sales percentage increased slightly.

SG&A expense increased primarily due to higher net sales and higher research and development expense, including higher bid and proposal costs.

SG&A expense as a percentage of net sales decreased slightly.

Operating income increased primarily due to increased net sales.

Operating income as a percentage of net sales decreased slightly.

First quarter of 2024 compared with the first quarter of 2023

Net sales decreased due to lower sales of $10.1 million for engineered products and lower sales of $0.8 million for energy systems.

Cost of sales decreased primarily due to lower net sales as well as certain unfavorable changes in contract estimates.

The cost of sales percentage increased during the period due primarily to product mix and unfavorable changes in contract estimates.

SG&A expense increased slightly, and SG&A expense as a percentage of net sales increased.

Operating income and operating income as a percentage of net sales decreased primarily due to program mix and unfavorable estimate changes related to electronic manufacturing services contracts.

Financial Condition, Liquidity and Capital Resources

Our principal cash and capital requirements are to fund working capital needs, capital expenditures, income tax payments, and debt service requirements, as well as acquisitions.

We may deploy cash for the stock repurchase program.

It is anticipated that cash on hand, operating cash flow, together with available borrowings under our $1.15 billion credit facility, will be sufficient to meet these requirements.

To support acquisitions, we may need to raise additional capital.

No cash pension contributions have been made since 2013 or are planned for the remainder of 2023 for the domestic qualified pension plans.

No cash pension contributions

have been made since 2013 or are planned for the remainder of 2024 for the domestic qualified pension plans.

Cash and Cash Equivalents

Cash and cash equivalents totaled $508.6 million at October 1, 2023 compared with $638.1 million at January 1, 2023.

Cash equivalents consist of highly liquid money-market mutual funds and bank deposits with maturities of three months or less when purchased.

Cash and cash equivalents totaled $912.4 million at March 31, 2024 compared with $648.3 million at December 31, 2023.

Cash equivalents consist of highly liquid money-market mutual funds with maturities of three months or less when purchased.

Long-term Debt

Total debt at October 1, 2023 was $3,244.1 million compared with $3,920.6 million at January 1, 2023.

At October 1, 2023, $1,130.9 million was available under the $1.15 billion credit facility, after reductions of $19.1 million in outstanding letters of credit.

Total debt at March 31, 2024 was $3,246.3 million compared with $3,244.9 million at December 31, 2023.

Subsequent to the end of the first quarter of 2024, the Company made a $450 million debt maturity payment on the Senior notes due April 2024.

At March 31, 2024, $1,128.2 million was available under the $1.15 billion credit facility, after reductions of $21.8 million in outstanding letters of credit.

Our bank credit agreements, which includes our $1.15 billion credit facility expiring March 2026 and our $150.0 million term loan due October 2024, require us to comply with various financial and operating covenants.

At October 1, 2023, we were in compliance with these covenants.

At March 31, 2024, we were in compliance with these covenants.

Our liquidity is not dependent upon the use of off-balance sheet financial arrangements.

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The amounts involved may be material.

Net cash provided by operating activities was $671.7 million for the first nine months of 2023 compared with $249.1 million, driven primarily by the first nine months of 2022 including a payment of $296.4 million to the Swedish Tax Authority related to a disputed pre-acquisition 2018 tax reassessment issued to a FLIR subsidiary.

The first nine months of 2023 reflected lower inventory purchases, lower income tax payments and higher accounts payable activity as compared with the first nine months of 2022.

The IRS announcements related to the California floods (IR-2023-33 and IR-2023-189) postponed approximately $139 million of our second and third quarter 2023 U.S.

federal income tax payments until the fourth quarter of 2023.

As a result, our cash paid for income taxes in the fourth quarter of fiscal 2023 will significantly increase because of these deferred federal tax payments.

Net cash used in investing activities was $127.3 million for the first nine months of 2023 compared with $63.9 million.

During the first nine months of 2023, we spent $53.5 million on acquisitions as compared with $11.9 million.

Capital expenditures for the first nine months of 2023 and 2022 were $74.7 million and $58.5 million, respectively.

Stock Repurchases

In April 2024, our Board of Directors approved a stock repurchase program authorizing the Company to repurchase up to $1.25 billion of Teledyne’s common stock.

This authorization superseded prior open stock repurchase programs authorized by the Board of Directors.

The newly authorized stock repurchase program does not have a stated expiration date.

Shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or

via an accelerated stock repurchase program.

Shares could be repurchased in a plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934.

The repurchase program is expected to remain open continuously, and the number of shares purchased will depend on a variety of factors, such as share price, levels of cash available, acquisitions and alternative investment opportunities available immediately or longer-term, and other regulatory, market or economic conditions.

The Company currently intends to fund future share repurchases with cash on hand and available borrowings under the Company's credit facility.

No repurchases under any authorizations were made in the first quarter of 2024.

Net cash provided by operating activities was $291.0 million for the first three months of 2024 compared with $203.0 million, driven primarily by stronger working capital conversion in the first three months of 2024.

Net cash used in investing activities was $15.9 million for the first three months of 2024 compared with $76.9 million.

During the first three months of 2024, we spent $0.0 million on acquisitions as compared with $52.5 million.

Capital expenditures for the first three months of 2024 and 2023 were $15.9 million and $24.4 million, respectively.

We currently plan to invest approximately $100 million for capital expenditures in 2024.

Net cash used in financing activities was $665.7 million for the first nine months of 2023 compared with $115.2 million.

During the first nine months of 2023, the Company repaid $125.0 million of amounts outstanding on its credit facility, the $300.0 million Fixed Rate Senior Notes due April 2023, and the remaining $245.0 million on its term loan due May 2026.

Company also repurchased and retired $10.0 million of its Fixed Rate Senior Notes due April 2031, recording a $1.6 million non-cash gain on the extinguishment of this debt.

Proceeds from the exercise of stock options were $27.2 million for the first nine months of 2023 compared with $18.4 million for the first nine months of 2022.

Net cash provided by financing activities was $6.1 million for the first three months of 2024 compared with net cash used in financing activities of $103.4 million, with the first three months of 2023 including a $100.0 million payment on our credit facility.

Critical Accounting Policies and Estimates

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accounting for business combinations, goodwill, and acquired intangible assets;

accounting for income taxes;

and accounting for pension plans.

and accounting for income taxes.

For additional discussion of the application of the critical accounting policies and other accounting policies, see Note 1 to these condensed consolidated Financial Statements and also Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Note 2 of the Notes to Consolidated Financial Statements included in Teledyne’s 2023 Form 10-K.

Safe Harbor Cautionary Statement Regarding Forward-Looking Information

From time to time we make, and this report contains, forward looking statements, as defined in the Private Securities Litigation Reform Act of 1995, directly or indirectly relating to sales, earnings, operating margin, growth opportunities, acquisitions, product sales, capital expenditures, pension matters, stock-based compensation expense, the credit facility, interest expense, severance, relocation and facility consolidation costs, environmental remediation costs, taxes, exchange rate fluctuations and strategic plans.

From time to time we make, and this report contains, forward looking statements, as defined in the Private Securities Litigation Reform Act of 1995, directly or indirectly relating to sales, earnings, operating margin, growth opportunities, acquisitions, product sales, capital expenditures, stock repurchases, pension matters, stock-based compensation expense, the credit facility, interest expense, severance, relocation and facility consolidation costs, environmental remediation costs, taxes, exchange rate fluctuations and strategic plans.

Forward-looking statements are generally accompanied by words such as “estimate”, “project”, “predict”, “believe” or “expect”, that convey the uncertainty of future events or outcomes.

All statements made in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and in other sections of this Form 10-Q that are not historical in nature should be considered forward-looking.

All statements made in

this Management’s Discussion and Analysis of Financial Condition and Results of Operations and in other sections of this Form 10-Q that are not historical in nature should be considered forward-looking.

Actual results could differ materially from these forward-looking statements.

Many factors could change anticipated results, including:

ongoing challenges and uncertainties posed by the lingering COVID pandemic for businesses and governments around the world;

changes in relevant tax and other laws;

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disruptions in the global economy;

the conflict in Israel and its effect on neighboring regions;

the ongoing conflict in Israel and neighboring regions, including related protests and the disruption to global shipping routes;

the ongoing conflict between Russia and Ukraine, including the impact to energy prices and availability, especially in Europe;

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cuts to defense spending resulting from existing and future deficit reduction measures or changes to U.S.

and foreign government spending and budget priorities triggered by inflation, rising interest costs, and economic condit i ons;

and foreign government spending and budget priorities triggered by inflation, rising interest costs, and economic conditions;

impacts from the United Kingdom’s exit from the European Union;

uncertainties related to the policies of the U.S.

Presidential Administration;

uncertainties related to the 2024 U.S.

Presidential election;

the imposition and expansion of, and responses to, trade sanctions and tariffs;

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threats to the security of our confidential and proprietary information, including cybersecurity threats;

risks related to artificial intelligence;

natural and man-made disasters, including those related to or intensified by climate change;

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Weakness in the commercial aerospace industry negatively affects the markets of our commercial aviation businesses.

Ongoing issues with Boeing’s 737 MAX product line could result in manufacturing delays and lower sales of our products to Boeing.

In addition, financial market fluctuations affect the value of the company’s pension assets.

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and foreign governments, including economic sanctions, could result, over time, in reductions or realignment in defense or other government spending and further changes in programs in which the company participates.

In the event of a U.S.

government shutdown, our business and results of operations could be impacted by disruptions to federal government operations and funding.

While our growth strategy includes possible acquisitions, we cannot provide any assurance as to when, if or on what terms any acquisitions will be made.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements